Back to top

Ahead of Wall Street

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Friday, February 14, 2014

Stocks have been up this week were up in five of the last six sessions and remain on track to close the week on a positive note, with favorable data out of Europe adding to an overall air of calm about the global economic backdrop. Sentiment shifted materially this week, particularly following Janet Yellen’s Tuesday testimony, helping erase most of the year-to-date losses. Investors seem to have decided that the recent run of soft economic data is nothing more than a weather-induced speed bump and will disappear as the skies clear.

Europe’s economy expanded at a modestly better than expected pace, driven by German which accounts for about a third of the region’s economic output. Growth did expand to formerly weaker economies, with France, Italy, and Spain, with even Greece contracting less than expected. The Euro-zone economy came out of recession in the second quarter of 2013 and has been stay in the positive column for three quarters in a row, but still remains below the pre-2008 peak level. That said, this is good news for the European Central Bank which has lately been under pressure to cut interest rates to fight dis-inflation and low growth.

On the earnings front, including this morning’s reports from J.M. Smucker (SJM - Analyst Report) and Campbell Soup (CPB - Analyst Report), we now have Q4 results from 401 S&P 500 members that combined account for 86.2% of the index’s total market capitalization. Total earnings for these companies are up +11.1% from the same period last year, with 68.6% coming ahead of consensus EPS estimates. Total revenues are up only +0.8% and 61.1% have beat revenue expectations. Revenue weakness has been a recurring theme in recent quarters and Q4 is no different, though the unusually low growth pace thus far is mostly due to the Finance and Energy sectors, particularly one-off tough comps for Prudential Financial (PRU - Analyst Report).

The Q4 earnings season has overall been not that bad, with the earnings growth rate the highest of 2013 and total earnings on track to reach a new all-time quarterly record. Companies have beat estimates, both EPS and revenue, at an above-average rate. But they continue to guide lower, prompting estimates for the current quarter to come down. Total earnings for 2014 Q1 are now expected to decline by -2.3%, down from estimates of +2.1% at the start of the Q4 reporting season. With weather an even bigger factor for companies in the retail sector that will be coming out with results in the coming days, we will likely see even more downside pressure on Q1 estimates.  

Sheraz Mian
Director of Research

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%